03/01/06 - CAHF News release

Serving People Through the Continuum of Long-Term Care

For Immediate Release: March 1, 2006
For Information Contact: Betsy Hite - (916) 441-6400 x 226 or (916) 233-6031

President's FY 2007 Budget Proposal Will Jeopardize Plans to Improve Care in California's Nursing Homes
California is one of the ten most critically impacted states - $125 million in new federal funding vanishes. Actual impact will be $250 million as state matching funds are lost.

Just as the most significant reform of nursing home financing in California is being implemented, the President's proposed budget significantly reduces the funding for this landmark reform.

"The President's FY 2007 budget seeks to reduce quality assurance fees, often characterized as a "provider tax", under which providers put up the seed money and then the states use that money to leverage an equal amount from the federal government under the 50/50 Medicaid match system. If the amount of funding available through the provider tax provision is reduced, there is not enough new money to implement the quality improvements anticipated in AB 1629," said Jim Gomez, President and CEO of the California Association of Health Facilities (CAHF).

In 2004, the California legislature passed, and Governor Schwarzenegger signed AB 1629, landmark nursing home reform legislation designed specifically to improve care in California's 1,100 free-standing skilled nursing facilities.

"Anyone with a loved one in a nursing home needs to contact their Congressional members immediately and tell them to stop this cut, which threatens to strip us of our ability to improve nursing home care in this state by taking away a home's ability to hire more staff, improve the physical environment and modernize its systems," said Assembly Majority Leader Dario Frommer (D-Glendale) who authored AB 1629.

A new analysis of the proposed federal budget jointly conducted by BDO Seidman and the American Health Care Association (AHCA) found that this proposal cuts nursing home funding nationally by $1.58 billion. The impact of lost federal funds on California is $125 million, but the true impact is $250 million because of the lost state matching funds.

BDO Seidman, which analyzed the impact of the proposed cuts, undertakes an annual study to measure the shortfall between Medicaid reimbursement to nursing home providers and the states' allowable nursing home costs. The most recent results, from 2002, indicate the average shortfall in Medicaid reimbursement was $12.58 per Medicaid patient day - meaning states pay providers $12.58 less than the actual cost of providing quality care. Many states use a quality fee or provider tax to help close the gap in the growing disparity between care costs and actual governmental reimbursements.

According to the BDO Seidman/AHCA analysis, seniors in the following 10 states will be most negatively impacted based upon the loss of federal funds imposed by the proposed FY 2007 federal budget:

Lost Federal Funds
		($million)	(-$ ppd)
	United States	-$1,571.8	($6.53)
1	Pennsylvania	-$167.0	($8.18)
2	California	-$125.0	($5.43)
3	New York	-$114.5	($3.82)
4	Michigan*	-$112.5	($11.25)
5	Mississippi*	-$88.0	($15.43)
6	Missouri	-$84.9	($9.54)
7	Indiana	-$74.3	($7.74)
8	Louisiana*	-$70.2	($9.00)
9	Arkansas	-$66.1	($15.43)
10	Oklahoma	-$62.0	($13.20)

Background

AB 1629 relies on the provider tax (quality assessment fee) to adequately fund skilled nursing facilities. The President's budget effectively reduces that funding source, which will threaten the level of quality care in California skilled nursing facilities.
Nearly two-thirds of nursing home patients are covered by Medicaid. Medicaid underpays for patients by nearly $20 per patient per day. As a result, improvements in nursing home staffing and quality have been compromised.
Through its Quality Improvement Program, the Bush Administration has partnered with the long term care profession to bring about quality improvement initiatives. The Administration has praised the strides nursing homes have made in providing quality care, yet now it proposes Medicaid cuts that could jeopardize these improvements.
In place since the 1980s, 33 states currently use a quality assurance fee or provider tax, as approved by the Centers for Medicare and Medicaid Services (CMS), to access additional federal revenue to help fund Medicaid program costs. States utilize this supplemental revenue to more adequately fund quality long-term care services for seniors and persons with disabilities, especially as it relates to staffing and coping with the rapidly escalating costs of providing care. States may now assess up to 6% of the total revenue from providers and use that to obtain increased federal Medicaid matching funds. The Administration's federal budget proposal cuts the assessment to 3%.

CAHF is a non-profit Sacramento-based association which represents for-profit and not-for profit skilled nursing homes and homes serving the developmentally disabled. It is the largest provider of continuing education for long-term care providers in California.

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California Association of Health Facilities | 2201 K St., PO Box 537004
Sacramento, CA 95853 | 916.441.6400 | Fax 916.441.6441